$5 Gas Good For Box Office? Better For DVDs and Downloads

The Hollywood Reporter trots out the stale (and dubious) argument that high gas prices may actually increase movie-theatre attendance, since people are less willing to take long car trips.

This argument is usually made in the form of Monday-morning box-office reports saying that, in an economic downturn, movie attendance often increases since it’s a cheaper entertainment option.

Cheaper than what? Concerts, sporting events, sure. But $12 movie tickets aren’t less expensive than tossing a baseball around in your backyard or reading or sitting at home watching TV, a DVD you rented (and had delivered to you via Netflix) or a movie you downloaded online.

So the entertainment industry may benefit from higher gas prices and other economic problems, but it’s the DVD-rental and legal-download sectors that should profit the most. There probably isn’t conclusive data for this yet, but it may explain why theatre attendance dipped in 2005 even though oil prices were on the rise. And longtime studio holdouts might want to jump on the Hulu, iTunes and Amazon.com bandwagons if they want to benefit when times get really tough.

THR: Economists have long debated how much of a factor gas prices are on movie attendance. While there is data showing both sides — and experts say any connection is at best correlated, not causal — several pivotal years of boxoffice growth during the past several decades did come at times of high oil prices.

In 1981 and 1982, for example, oil prices rose roughly 30% and then 10% year-over-year; in that same period, boxoffice saw sizable increases of 8%, then 16%.

In years when oil prices were roughly flat, like 1992, boxoffice rose only 1%.

Other years, however, show little correlation: 2005’s notorious 6% drop in boxoffice came when oil prices actually had risen more than 25%.

Economists say that oil prices may not so much cause a boxoffice spike as provide a cushion; where other industries see dips in times of recession and high gas prices, the movie industry can stay closer to flat, as the number of people switching to low-cost options like moviegoing offsets the consumers who choose not to spend at all.